Facing future budget deficits, the Carmel City Council considers tax increases on the ballot.

The economic five-year forecast presented to the Carmel City Council on March 24 was grim. Rising costs are outpacing projected revenues and there’s a $100 million deferred maintenance budget conundrum to solve. The city will effectively run out of money in its general fund in three years. It was time, said City Administrator Brandon Swanson, for the Council to begin pulling different economic levers to bring in new revenue.

On Monday, April 6, the council heard a full array of levers they might decide to pull, including asking voters to agree to an increase in sales tax, issuing bonds, paid parking, a real estate transfer tax, forming a special district for infrastructure maintenance, even becoming a charter city to garner more control over revenue measures. Councilmembers leaned toward placing a possible sales tax increase on the November ballot.

In February, a Council majority signaled a desire to put a transient-occupancy tax (TOT) measure on the November ballot as well, potentially raising the tax levied on hotel guests’ bills from 10 percent to 12 percent.

Concerns were raised that voters might hesitate with two tax measures, but nevertheless, on Tuesday, April 7, the council voted 4-1 to continue the process toward putting the TOT measure on the ballot, with Mayor Dale Byrne voting no.

The Carmel Innkeepers Association made a hard push against the proposed ballot measure, arguing that raising the tax would potentially decrease overall revenue and discourage hoteliers from renovating aging hotels.

Councilmember Bob Delves said he understood their arguments, but he was still in favor of raising TOT, because of deferred maintenance and other financial pressures.

“Our product hasn’t kept up with your product and we need to improve our product,” Delves said.

Wording for both a sales tax measure and a TOT measure is expected to come back to the council in May.